The protection of business secrets, Roquefeuil avocats, Paris

Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 concerns the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure .

Objective

It lays down common measures against the unlawful acquisition, use and disclosure of trade secrets and aims to ensure the proper functioning of the internal market.It aims to better protect European businesses against economic espionage and industry, in particular, SMEs.

Thus in the event of theft, acquisition or illegal use of confidential information, the victim will be able to defend himself before the civil courts throughout Europe. In other words, the directive is intended to have a deterrent effect against the unlawful disclosure of trade secrets, while safeguarding fundamental rights and freedoms or general interests such as public security, consumer protection, public health, environment and labor mobility.

Object of protection

The object of protection appears broad, whether it concerns the definition of the protected secrets or their holders.

Article 1(1) of the Directive defines trade secrets as

“information that meets all the conditions

following:

– a) they are secret in the sense that, in their entirety or in the

exact configuration and assembly of their elements, they are not

generally known to people in circles dealing with

normally of the kind of information in question, or are not readily

accessible;

– b) they have commercial value because they are secret;

– c) they have been the subject, on the part of the person who has

control in a lawful manner, with reasonable provisions, taking into account the

circumstances, intended to keep them secret".

Such a definition brings together data of a technical nature (know-how and manufacturing processes, in particular) or commercial (customer files, marketing studies, supplier files) having the common characteristic of having been kept secret.

Penalties

The sanctions provided for by the text are only civil – which must be dissuasive but proportionate – but the States will retain the possibility of adding criminal sanctions (arts. 5 and 6).

After the publication of the directive in the Official Journal of the EU and its entry into force, Member States will have a maximum period of two years to incorporate the new provisions into their national law.

The directive entered into force on July 5, 2016. It must be transposed into national law by the Member States no later than June 9, 2018. In the meantime, they must still refer to their national provisions on the question.

From the French point of view

In France, far from being abandoned to any legal void, business secrets already benefit from protection in the field of action for unfair competition and by certain criminal texts (breach of trust and misdemeanor violation of a trade secret, in particular).

Strictly speaking, there is no offense of “violation of business secrecy”. (A text had been proposed, but had not gone as far as final adoption: a bill which introduced this new offense with penalties of 3 years' imprisonment and a fine of €375,000).

The trade secret

In France, we speak rather of “trade secret”, referring to know-how and inventions: this is governed by article L. 1227-1 of the labor code which provides in particular for a criminal sanction. This article is also reproduced in article L. 621-1 of the intellectual property code. Industrial secrecy is governed by article L. 124-4 paragraph 3 of the environment code and by the law of July 17, 1978 which contains exemptions.

The limits of secrecy

Generally speaking, all the data seems to be communicable, including on nuclear power and GMOs. The only limits are privacy, national security and industrial secrets, professional secrecy, information covered by confidentiality agreement.

One can also apply article 39 secondly of TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights) which provides that

“Natural and legal persons shall have the

ability to prevent information lawfully under their control from

be disclosed to third parties or acquired or used by them without their

consent and in a manner contrary to honest commercial practice, under

provided that this information:

(a) are secret in the sense that, as a whole or in the

exact configuration and assembly of their elements, they are not

generally known to people in circles dealing with

normally of the kind of information in question or are not readily

accessible;

(b) have commercial value because they are secret; and
(c) have been the object, on the part of the person who lawfully has the

control, of reasonable arrangements, taking into account the circumstances,

intended to keep them secret.

This text thus offers a derogation for the specific field of intellectual property and is reminiscent of the provisions of Article 1 of the directive.

Economic espionage

In France, two decisions of 1time instance were able to constitute the first condemnations of economic espionage by the theft of immaterial data (“Michelin”, June 21, 2010 and “Rose”, September 26, 2011, rendered by the Criminal Court of Clermont-Ferrand).

In this case, the authors of the infringements had each appropriated what are called business secrets, that is to say non-patentable information, covered by confidentiality and having an economic or strategic value for the company. It was intangible data. This then announced itself as precursory decisions of the scope of the directive.

The critics

The fears of journalists

The world of journalism is reluctant to this directive.

Indeed, the Press considers that it flouts the right to inform journalists and

citizens' right to be informed. (Setting up a petition in particular).

It calls for the pure and simple abolition of this directive, which provides for heavy penalties in the event of the disclosure of business secrets, including by journalists.

If a source or a journalist “violates” this “business secrecy”, colossal sums could be claimed from him.

Prison sentences could even be imposed in some countries.

However, MEPs claim that journalists will be exempted from these measures in accordance with respect for the right to information and freedom of expression (Article 5 of the directive).

But journalists still think that these will only be exceptions, very rarely recognized.

Indeed, the article remains very vague and therefore subject to broad interpretation for transcription in the Member States.

Whistleblowers neglected?

Regarding whistleblowers, the directive does not provide protection for them, although they are still mentioned in the preamble

“the measures, procedures and

planned repairs […] should not impede the activities of the launchers

of alerts”.

A separate directive concerning them is still being prepared.

However, in France, they already benefit from protection, within the meaning of article 122-9 of the penal code (created by law n°2016-1961 of December 9, 2016 relating to transparency, the fight against corruption and modernization of economic life), which provides that

"is not criminally liable the person who infringes a secret protected by law, provided that this disclosure is necessary and proportionate to the safeguard of the interests in question, that it takes place in compliance with the reporting procedures defined by the law and that the person meets the criteria for defining the whistleblower provided for in Article 6 of Law No. 2016-1691 of December 9, 2016 on transparency, the fight against corruption and the modernization of economic life”.

As such, the whistleblower is defined by the aforementioned law of December 9, 2016 as

“a natural person who reveals or reports, in a disinterested manner and in good faith, a crime or an offence, a serious and manifest violation of an international commitment duly ratified or approved by France, of a unilateral act of an organization international community taken on the basis of such a commitment, of the law or of the regulations, or a serious threat or damage to the general interest, of which it has personal knowledge". (article 6 paragraph 1 of the law).

Consequently, they benefit from an exemption from business secrecy when the general interest allows it.

MR.